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Banks hit hard in market’s jitters

The big four banks were amongst the hardest hit on Wednesday as the market’s rollercoaster ride continued, with foreign investors withdrawing their holdings from high-yielding stocks based on the low Aussie dollar, falling commodity prices and overseas turbulence.

In what has been an unpredictable beginning to the new financial year, the S&P/ASX 200 (^AXJO) (ASX: XJO) fell 1.9% on Monday before recovering on Tuesday, where 2.6% was added in what marked the index’s best day of trading in 20 months. On Wednesday, that gain was almost all reversed with another 1.9% fall, whereby around $25 billion was wiped from stocks.

Westpac (ASX: WBC) was again the heaviest to fall out of any of the big banks, losing 2.64% in value, whilst ANZ (ASX: ANZ), NAB (ASX: NAB) and Commonwealth Bank (ASX: CBA) all fell between 0.54% and 2.14%. New figures released by Australian Prudential Regulation Authority earlier in the week revealed that Westpac’s market share has slipped by 0.7% over the last year and it recorded the lowest level of growth in home loan lending in May out of any of the banks.

Whilst these figures likely dragged Westpac’s shares further than the other banks yesterday, a diminishing Australian dollar is also decreasing the value of foreign investors’ holdings, causing many to run for the exit.

Foolish takeaway

Whilst the market’s jitters can open up very attractive investment opportunities, the banks still present as expensive options to add to your portfolio, despite their heavy losses in recent weeks.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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